RIAA Barker Gillette acted as project counsel to Power Cement Limited (PCL) on Pakistan’s first captive power transaction structured under a formal Ijarah lease, achieving financial close on 26 September 2025. The Rs. 1.5 billion transaction structures a 7.5 MW wind-powered captive generation facility at PCL’s Nooriabad site through an Ijarah with Burj Clean Energy Modaraba (BCEM)—Pakistan’s first clean energy investment fund structured as a modaraba.
Under the Ijarah financing arrangement, BCEM will develop, own, and lease the wind power plant to PCL over 20 years. PCL will generate clean electricity on-site for its cement manufacturing operations while making rental payments compliant with Shariah principles. The arrangement reduces dependence on grid power and fossil fuels.
The Bank of Punjab led the financing consortium as Lead Bank, Adviser, Arranger, and Intercreditor Agent. Additionally, National Bank of Pakistan served as Mandated Lead Advisor, Arranger, and Security Agent. Meanwhile, Pak Kuwait Investment Company joined as Musharaka Participant and equity provider. The documentation establishes performance-based mechanisms with minimum committed energy targets adjusted for weather conditions. Furthermore, it includes quarterly and annual reconciliation processes and risk allocation frameworks compliant with Islamic finance principles.
Bilal Shaukat, Managing Partner at RIAA Barker Gillette, commented: “This transaction demonstrates how Ijarah structures support industrial decarbonisation through captive power solutions. Currently, 40-50% of Pakistani industries rely on captive power due to grid reliability issues. BCEM’s structure as Pakistan’s first clean energy investment fund provides a replicable template for renewable energy adoption across the manufacturing sector.”
The agreement includes true-up mechanisms to reconcile projected versus actual project costs. Moreover, it establishes comprehensive step-in rights for financiers and termination scenarios aligned with Islamic finance principles. The framework also addresses force majeure events, changes in law, and performance adjustments based on wind resource variability. Orient Energy Systems has been appointed to deliver the project using Goldwind wind turbines. Operations are expected to commence in FY26.
This transaction positions Pakistan’s industrial sector to accelerate decarbonisation efforts through structured Islamic finance solutions, addressing both energy security and environmental sustainability imperatives.
Our team acting on this matter was led by Bilal Shaukat (Managing Partner – Pakistan) and included Rohaan Nasir (Associate) and Mahnoor Javed (Associate).
For further information about Shariah-compliant renewable energy transactions and captive power structures, please contact Bilal Shaukat today.
This article is not legal advice; it provides information of general interest about current legal issues.
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